Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim's Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
A day of distribution seems to have settled into the market
for Thursday’s trading.
Fortunately, even after a bit of selling, the market remains very healthy and in
a confirmed uptrend. Selling from time to time can be a good thing to keep
investors second-guessing the indices. When selling starts piling up day after
day over a 2-3 week period there is cause for concern.
Chart courtesy of
StockCharts.com
Chart courtesy of
StockCharts.com
When there is some sales pressure in the stock market, it is always a good idea
to look at how the market’s leadership is doing. Leaders are defined as growth
stocks that have been outperforming the broad market. Some of the names we have
followed through this column are Apple (AAPL | news | PowerRating | PR Charts ), Google (GOOG | news | PowerRating | PR Charts ),
Research in Motion (RIMM | news | PowerRating | PR Charts ), Copa Holdings (CPA | news | PowerRating | PR Charts ), First
Marblehead (FMD | news | PowerRating | PR Charts ) and the New York Stock Exchange (NYX | news | PowerRating | PR Charts ) among
others. Some of the larger-cap stocks saw some of the selling in today’s
session, such as AAPL, but it still remains well above its 50-day moving
average.
Chart courtesy of
StockCharts.com
As mentioned above, some selling is actually healthy for the market and stocks
since things do not usually march straight up. It becomes unhealthy when key
areas of support are violated and volume increases into the selling. After
looking at some of the healthy names listed above, take a look at Oracle
(ORCL | news | PowerRating | PR Charts ). This is a stock that was marching higher with the rest of the
market before running into trouble. On 12/6, the stock closed below its 50-day
moving average on very heavy trade. Take a look at an unhealthy sell-off…
Chart courtesy of
StockCharts.com
If we are diligently watching the broad market as well as leading stocks, there
should be little trouble in assessing the health of our trading environment.
Enjoy your weekend!
